Things to know about Federal Reserve Bank of New York’s gold vault

By | July 31, 2017

The Federal Reserve Bank of New York is the world’s largest gold vault. The Federal Reserve does not own the gold. In 1934, the Gold Reserve Act was created. It required that the Federal Reserve System should transfer all the ownership of all of its gold to the Department of Treasury. The secretary of the Treasury then issued gold certificates to the Federal Reserve for the amount of gold transferred at the-then statutory price. Gold certificates are usually denoted in US dollars. The gold certificates do not give the Federal Reserve the right to redeem any of the certificates for gold. Although the Federal Reserve does not own any gold, the Federal Reserve Bank of New York acts as the custodian of the gold.

The vault provides the account holders with the necessary security to store their monetary gold reserves. There are roughly 540,000 gold bars that are stored there and only 5% belong to the United States Government. The rest belong to 36 foreign governments, central banks and official organizations. The combined weight of the gold bars as at 2015 was 6,350 tons. No individual or private entity is allowed to store their gold in the vault. To ensure the security of the gold bullions, the accounts are only known by number and not name. The depositors pay $1.75 dollars for each time that their gold is moved either between compartments or when the gold enters or leaves the Federal Reserve Bank of New York.

The gold vault is about half the size of a football field. There is only one way in and one way out. Gold is stored in the form of bullions and they are stacked on wooden pallets. To reach the bullion vault, pallets are loaded on one of the bank’s elevators and the gold is sent down five stores below the street level to reach the vault floor. Once the gold has reached inside the vault, the gold bullions become the responsibility of the control group. The control group consists of the representatives of the three bank divisions: Custody, Vault Services and Auditing. Whenever the gold is moved or even when someone enters the vault, a representative from each division must be present. It should be noted that even if a bulb is being replaced, these representatives must be present. Each gold bar that is in the vault weighs about 28 pounds though because of the density of gold the weight comes closer to 45 pounds. This weight makes it very hard for one to carry the gold outside the vault, hence reducing the chances of theft.

All the gold that is stored in the vaults are carefully inspected to ascertain that they are of high purity. Their weight and the name of refiner is also checked. Once the gold has successfully passed the checks, the findings are recorded in the New York Fed’s records. This is a crucial step as the New York Fed returns the exact gold bullions to the account holder during the withdrawal process. Once the verification process is completed, the gold is moved to the vault that has 122 compartments. Each compartment contains gold that is held by only one owner. Mutual ownership is not permitted.

The Federal Reserve Bank of New York has heightened security features. The windows on the bottom three floors are covered by large iron bars. Outside the building and in the surrounding blocks, the Fed’s security move around in circles carrying large automatic weapons. Inside the bank, there are huge security measures that have been put in place. They include cameras, thick walls and guns that the security people who are inside the building carry.

The security people who protect the gold are armed with a handgun, a shotgun and a rifle. Most of the security are experts. The security is further heightened by a closed-circuit television system and an electronic surveillance system which sends out a signal whenever the vault is opened or closed.  The New York Federal Gold vaults have an interesting design that add to the security features.

Although most of the gold bars appear uniform there are minor differences that denote the time and place that the bar was cast. Before 1986, the gold that was cast in the United States were mostly rectangular bricks. However, today most gold bullions conform to the international standards which dictate that the gold must be trapezoidal in shape. The markings (set of numbers) indicate the melt, which is the molten gold from which the bar was made. There is also another set of markings that denote the fitness or the purity of the gold. A stamped seal usually indicates where the gold was cast.

Gold bullions are not 100% gold as the bars would not be able to hold their shapes. Thus, they contain a small amount of other metal for instance silver, platinum or even copper. The addition of the above-mentioned metals gives the gold bar a tinge of color.  The color can provide information on the type of alloy that was used in making a specific type of gold bar. For example, traces of silver and platinum give the gold bar a whitish shade, iron gives it a greenish hue color while copper is mostly found in reddish bars.

Every year, thousands of tourists visit the Federal Bank of New York to view the gold bars. However, this was suspended after the 2011 attacks. It was only recently that these visits were reinstated.

It is no doubt that the Federal Reserve Bank of New York is the largest gold reserve. The security measures that have been put in place help to keep the gold secure from any internal or external factors. The gold is kept in different compartments. Some are stacked while others are kept in tightly sealed spaces. Any person can tour the vault. However, it should be noted that this is only done under strict supervision. Moreover, no private entities or individuals are allowed to store their gold in the vault.

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